Accounting 101: Understanding Basic Accounting Terms Using a Garden Analogy
If you are not an accountant, but you've started a business, accounting terms and reports can be overwhelming and scary for a lot of people.
But they don't need to be.
Let's break down some of the simple terms using easy examples with a garden analogy so you can understand what you should be looking for and how these terms and reports can help you in your business.
With every episode of Linda Tuttle Adventuring Accountant TV, I like to equip you with a free resource that goes with the episode for the week.
Since in this episode we're talking about easy terms that affect an income statement and expenses, I want you to know what tax deductions you should be looking for and keeping track of in your business. As a business owner, you should know what these deductions are. So, I want to give you my 9 Fool Proof Ways for Online Business Owners to Be More Profitable Guide.
After going through this guide, you will have a better idea of what tax deductions are available to you as a business owner and how keeping track of these expenses can help you increase your profit.
You can download the FREE resource by clicking the orange button above.
Accounting 101: Understanding Basic Accounting Terms Using a Garden Analogy
Accounting terms don't need to be overwhelming or scary. With some simple examples you can understand what you need to know to run your business effectively.
There are 3 Main Financial Statements for you to be aware of:
Today's discussion focuses on terms used on an income statement.
So what is an income statement?
An income statement shows a company’s revenue (income), expenses, and profitability over a period of time.
If you watch the video, you will see an easy example of someone who owns a flower shop and what the revenue and expenses are and how this affects the profit and loss and what numbers to be looking for.
I see people who feel like they are hustling and selling all the time, but even though their revenue is high they are not making a profit because they aren’t keeping track of their expenses, other than they know they don’t have enough cash to pay their bills.
If you don’t know your numbers in your business, you won’t know how to set goals, manage expenses, how much to budget for taxes, etc.
No matter how small your business is, understanding these terms and keeping track of these numbers is critical to running your business efficiently.
Your financial situation can be compared to a garden. Just as a garden requires regular maintenance and care to grow and thrive, your finances require regular attention and management to achieve financial stability and security.
In this analogy, income is like sunlight and water, providing the necessary resources for the garden to grow. Expenses are like weeds that can choke the life out of the garden if not managed properly. Saving and investing are like fertilizers that can help the garden flourish and produce a bountiful harvest over time. Just as a gardener must tend to the garden regularly to keep it healthy, you must tend to your finances regularly to keep them healthy.
Resources
Accounting Workshop for Online Business Owners - Learn More Here
In Closing...
Managing the income and expenses in your business using a profit and loss statement is critical to running your business effectively.
You can download this FREE resource by clicking the yellow button below 
